PHILADELPHIA (KYW Newsradio) — Thomas Jefferson University on Wednesday signed a definitive agreement to merge with the Lehigh Valley Health Network in a deal that could close by this summer.
Jefferson and LVHN signed a letter of intent to merge last December. This new, more-definitive step now kicks off an approval process involving the Federal Trade Commission, the U.S. Dept. of Justice and the Pennsylvania Attorney General. And it will likely be a more thorough review than with previous mergers.
The FTC has become more cautious about health system mergers. New FTC and DOJ guidelines issued in December require more information from the merging parties.
“The new guidelines do provide a stronger stance against hospital and health system consolidation,” said Jaime Godwin, senior analyst for KFF, the health policy information organization formerly known as The Kaiser Family Foundation.
“There’s been a recent initiative between the DOJ, FTC and HHS to increase anti-trust enforcement across the health care system,” Godwin said.
Godwin says there have been only a few studies on hospital mergers. He says those studies that have been done show no observable impact on the quality of care, but they do show an increase in patient costs of 6% to 17%.
The FTC has cited escalating costs in recent challenges to mergers. That was the basis for its objection to Jefferson’s acquisition of Einstein Healthcare Network, which delayed the deal for more than two years.
Godwin says the agency could act faster on this merger because Jefferson and LVHN serve different markets.
“It does seem to be interested in challenging cross-market mergers more often, but we have yet to see a case of that litigated successfully,” he said.
Jefferson says the merger with LVHN “will increase access to high-quality and affordable care, clinical research and health plan offerings, and address health inequities for urban and rural communities in Eastern Pennsylvania and Southern New Jersey.”
It says the resulting system would comprise 30 hospitals and 700 sites for care.